NAN FUNG DEVELOPMENT LTD v. NEW KWONG ON LTD

NAN FUNG DEVELOPMENT LTD v. NEW KWONG ON LTD

Court held that the proper measure of compensation for the defective air-conditioning was the actual reasonable cost of installing a fit system in flat 8A (assessed at HKD 301,000 after allowable deductions), and that the defendant acted reasonably in postponing remedial works until June 1983 because the plaintiff denied liability and the stakeholders arrangement justified waiting; accordingly loss of use was awarded HKD 551,000 and admitted interest HKD 79,700, the retention fund of HKD 318,800 must be released to the defendant and judgment entered for the appropriate balance subject to interest adjustments.

Citation
NAN FUNG DEVELOPMENT LTD v. NEW KWONG ON LTD
Parties
Plaintiff (original Action); Defendant (counterclaim): Nan Fung Development Limited; Defendant (original Action); Plaintiff (counterclaim): New Kwong On Limited; Third Party: Associated Consulting Engineers
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
9 December 1983
Case Number
HCA7865/1982
Procedural Posture
Sale and Purchase Dispute; Building Defects; Counterclaim for Damages / High Court Judgment (trial)
Outcome
Judgment for defendant (New Kwong On Limited) on its counterclaim
Legal Topics
Breach of Contract, Measure of Damages, Mitigation of Loss, Loss of Use, Specific Performance/retention Funds, Building Defects (air Conditioning)
Source Language
EN
Contract Law Property Law Construction Law Remedies Breach of Contract Measure of Damages Mitigation of Loss Loss of Use +2 more

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Parties

Nan Fung Development Limited

Plaintiff (original Action); Defendant (counterclaim)

New Kwong On Limited

Defendant (original Action); Plaintiff (counterclaim)

Associated Consulting Engineers

Third Party

Procedural Posture

Sale and Purchase Dispute; Building Defects; Counterclaim for Damages / High Court Judgment (trial)

Legal Issues

  1. 1 Proper measure of damages for defective building works (cost of repair v diminution in value)
  2. 2 Whether defendant unreasonably delayed mitigation by postponing remedial works
  3. 3 Whether retention fund should be released and to whom

Ratio Decidendi

Court held that the proper measure of compensation for the defective air-conditioning was the actual reasonable cost of installing a fit system in flat 8A (assessed at HKD 301,000 after allowable deductions), and that the defendant acted reasonably in postponing remedial works until June 1983 because the plaintiff denied liability and the stakeholders arrangement justified waiting; accordingly loss of use was awarded HKD 551,000 and admitted interest HKD 79,700, the retention fund of HKD 318,800 must be released to the defendant and judgment entered for the appropriate balance subject to interest adjustments.

Court Disposition

Judgment for defendant (New Kwong On Limited) on its counterclaim

Orders

  • Retention fund of HKD 318800 released to defendant (New Kwong On Limited)
  • Judgment entered for defendant for remainder of assessed claims: cost of works HKD 301000; loss of use HKD 551000; admitted interest HKD 79700; final balance and interest to be determined on submissions of counsel